The “PBC’s of Pain-Free Audits

Sara LaidlawBusiness Solutions, Nonprofits, Technology0 Comments

As a contracted controller, I see the best and worst of financial audits. I’m here to tell you that your auditors should be considered trusted business partners, not demons from below!

Your annual financial audit can be an uphill drudgery or a coasting sail!

Why Do Audits Feel So Painful?

In my many years of non-profit audit prep experience, I have found that the main pain challenge is a lack of organization and communication between the client’s audit team and the auditors. Being unprepared and unorganized increases the cost and length of your audit, not to mention loss of sleep.

CPA firms have access to more tools than ever to collaborate with clients, but in my experience, most have not implemented any technology outside of Excel. Even if the CPA firm has implemented a checklist management tool, some clients want to stick with Excel.

The auditor’s PBC (Provided by Client) request list is intended to help you prepare.

I have seen PBC requests in many flavors – phone calls, faxed lists, emails, PDFs, Word docs, and Excel. Short-lists and long-lists. Some shared in DropBox or in some other online solution. The good news is that online project management tools with collaborative features are finally starting to pick up steam and some are specifically targeting the accounting industry.

I am passionate about keeping ahead of the curve. As a controller, I must be proactive when it comes to my audit preps. I know that firms and organizations using collaborative tools report 20-50% reduction in time spent on document exchange.

If your auditor is not on board with an online collaborative solution yet,

you can do what I did and implement a system yourself!

What we want to avoid is inefficiency:

Unfocused Effort –

  • Poor timing and prioritization
  • Duplicated work
  • Providing unnecessary reports or information
  • Unclear expectations from both parties
  • Ignored requests
  • Poor document management

Lack of Communication –

  • Lists of requests in emails to multiple people, which are impossible to track
  • Who is to answer what? Maybe the other guy will answer it!
  • Who’s got the ball?
  • Team unaware of what others are doing
  • Members answer in person yet do not to tell the others that it is off the 2Do list.
  • Where are the files? Who created them and whom should they ask to explain?

What can be done to make this process less painful?

First, the week of the audit is NOT the time to start preparing. Smooth audits depend on the work done BEFORE the auditors walk through the door.

Second, I have found that the best solution for audit prep is to avoid emails and create an online and collaborative relationship between the client’s team and their auditors. Get the most out of your auditor’s expertise by allowing them to focus on data analysis and not with struggling with supporting documents and answers.

Collaborate the entire audit process in ONE single client and auditor friendly environment.

While CPA firms may utilize audit-specific software, there are other list/collaborative products that may work fine, especially when created by the client.

Begin with the PBC request list and find a method to exchange not only documents but questions and answers. I look for solutions that enable me to be creative in the setup. I am a very visual person. I like conditional features such as bolding and changing colors as information changes. When planning the solution, look for customizable notifications. Who is to have access? How often will they be notified? Based on what changes? Ensure that your solution is secure. All data must be encrypted in transit and at rest. What happens to the list and documents once the audit is complete?

Examples of information needed:

  • Item Title – Short Description of Document name or Question

Elaborate in a comment thread

  • Comment thread per item

With username, date, and time stamp for audit trail

  • Ability to attach documents or enter an URL to the document’s location

With drag and drop

  • Who has the ball?

Assigned to Auditor name

Assigned to Employee name

With Drop down lists of names

  • Requested date vs. Due Date
  • Status

Fulfilled, Done, Whew

Workin’ on it, In Progress, It’s coming!

Waiting on Sara

Waiting on Mngt

Pending Answer

Answered verbally

  • G/L Acct number
  • Reference

General / Planning

Cash

Fixed Assets

A/R and Revenue

A/P and Expenses

Net Assets


Next year…

The best part of developing a collaborative PBC list is that questions and issues can be rolled-over to next year’s list, enabling a more proactive process. Cull unneeded items from the list. Make notes on pain points and items/processes that can be improved upon next year.

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